Double Entry: How the merchants of Venice shaped the modern world – and how their invention could make or break the planet, by Jane Gleeson-White (Sydney: Allen & Unwin, 2012).

Businesses have acted as an artery of global life since time immemorial.  Our lives and culture today would be severely curtailed without the innovation and trade that have been fostered for centuries by businesses. If we are to have a good grasp of history we need to include in our reading those books which explore the history of commerce.  Jane Gleeson-White’s book, Double Entry, is a good book to help the general reader not only enhance their understanding of this history but also to gain better insight into financial issues that affect every person on this planet today.

This book is an enjoyable and provocative read.  It traces the history of double entry book-keeping which is at the core of financial reporting and record keeping of businesses the world over.  Author of Double Entry, Jane Gleeson-White initially focuses on the enormous contribution of Venetian merchants to the emergence of double entry book-keeping and in particular that of fifteenth century mathematician Luca Pacioli. The genius of Pacioli was his ability to communicate new mathematical concepts to a broad audience using three significant developments of the era – the introduction of Hindu-Arabic numerals, writing in the vernacular instead of Latin (because it could be read by more people) and publishing his work using the printing press.  Pacioli had to explain Hindu-Arabic numerals in his book and how they could be used in basic arithmetic because many of his readers were unfamiliar with this new development.

In twenty-seven pages that reverberated throughout the European business world for centuries to come, Pacioli explained how the Venetian businessmen kept records of their business dealings using double entry book-keeping.  Gleeson-White has written Double Entry for a general audience.  To do this she draws extensively on Pacioli’s fifteenth-century treatise on book-keeping for he too was communicating to an audience who had no background in this form of account keeping. I thought that Gleeson-White’s use of Pacioli’s examples worked well.  She does not assume that the reader has any knowledge of double entry book-keeping.  The language she uses is engaging and where necessary she gives simple and clear explanations of how double entry book-keeping works.

This book does not simply explore the business and intellectual life of the Renaissance.  It traces the development of accounting to today.  Gleeson-White discusses the development of national accounts and their importance in macro-economic management. Despite the fact that I studied accounting at university and worked as a chartered accountant I was unaware of much of the history of accounting that she has shared in her book.

The most important argument Gleeson-White raises in her book is that double entry book-keeping is an exercise in rhetoric.  While this may surprise many readers most accountants would already be aware of the persuasive power of financial statements and the ability to develop a financial argument through judicious choice of accounting treatments for particular items – always complying with generally accepted accounting principles, accounting standards and the law of course.  I have not seen the rhetorical power of financial statements discussed so thoroughly with a general audience before.

The allure of numbers cloaks the rhetorical nature of financial statements.  As Gleeson-White states:

Accounting’s use of numbers gives it an air of scientific rectitude and certitude, and yet fundamental uncertainties lurk at its heart.

Accounting and economics are social sciences.  They examine and report on human behaviour.  The numbers they produce have an internal logic but need to be constantly assessed against other expressions of reason and ethics.  Accounting summarises the operations of a business. A summary by its nature skips many things. What is omitted? What is highlighted? What is obscured?

There are many aspects of life that double entry book-keeping fails to account for such as volunteer labour.  Our libraries and archives are dependent on considerable volunteer labour, but the extent of the dependence on this labour cannot be gleaned from the 2010-2011 annual report of the National Library of Australia. Gleeson-White highlights the problems for the environment produced by the double entry book-keeping system which fails to account for how business operations effect the environment.  Decisions are based on financial reports. If the effect of an organisation’s operations on the environment or its dependence on the work of volunteers is not included in the financial statements then it is likely that subsequent decisions based on those reports will not give sufficient consideration to these issues. Gleeson-White argues that the degradation of our environment is attributable to commercial decisions that have not considered the value of trees or the quality of air, soil and water.  She argues that “double entry now has the potential to make or break life on the earth” and concludes that:

We can continue to ignore the free gifts of nature in the accounts of our nations and corporations, and thereby continue to ruin the planet.  Or we can begin to account for nature and make it thrive again.  If numbers and money are the only language spoken in the global capitalist economy, then this is the language we must use… done well, it could reframe our vaues and transform the capitalist world in ways we are yet to imagine.

Many agree with Gleeson-White and much work has already been done to address these shortcomings of traditional accounting.  I would have liked Gleeson-White to recognise this fledgling work. While reading her book I was reminded of triple-bottom line reporting which is used by some organisations to account for social and environmental impacts of business operations. The Global Reporting Initiative (GRI) has done considerable work since the 1990s in this field and companies such as Rio Tinto have implemented the GRI framework in their reports.

However, this is the only blemish in a fascinating book.  Jane Gleeson-White shows command over her subject matter demonstrating thorough and deep research.  Double Entry is a delight to read.

This review is part of my contribution to the Australian Women Writers Challenge 2012.

Interviews and Other Reviews

• Jane Gleeson-White and Professor Geoff Harcourt (UNSW) discuss the book on Radio National’s Big Ideas, 9/5/2012.
• ‘Inside the mind of Jane Gleeson-White‘, Overland, 1/12/2011.
• David James, ‘Making everything count twice‘, Business Review Weekly, 26/1/2012.